The TV distribution regulations require distributors to include local television stations, which would normally mean that Videotron must distribute ICI in analog and digital to subscribers in the Montreal area. But Videotron is in the process of phasing out its analog cable system to make room for more digital channels and more bandwidth for video-on-demand and Internet service.

Videotron told the CRTC that fewer than 7% of its Montreal residential subscribers are still on analog cable, though that number is higher if you include institutional customers like hotels and hospitals, and those residences that have digital and analog on different TVs.

Quebecor had argued that the CRTC’s recent decisions to allow analog to continue its decline, by not licensing any new specialty channels for analog TV, for example, makes it clear that the transition to digital is more important than squeezing in another analog channel which would only disappear within a few years anyway as the analog network is dismantled.

ICI argued against the application, saying it would “result in ongoing and serious harm to ICI,” which is still struggling to develop an audience:

It has become apparent to ICI since its launch that ICI’s potential audience frequently consists of individuals that subscribe to Vide?otron’s “Classic Cable” service, which is the analog service. These potential viewers do not currently receive ICI. Vide?otron’s decision not to distribute ICI in accordance with the Regulations in not in the interests of subscribers as Vide?otron suggests. These subscribers would need to pay more to receive ICI, and make the transition to a more expensive digital service far ???sooner than they might otherwise choose – and even while many other services continue to be offered on an analog basis.

ICI pointed out that Videotron’s analog service in Montreal, which is much smaller than it used to be, still carries many U.S. signals, including two PBS stations.

And it said that while 7% may be small, it is still significant for a station that relies solely on advertising for revenue, and the fact that Videotron is still offering an analog service means it does not view this number as trivial.

It also said at least one program producer “decided not to purchase airtime on ICI due to the fact that the members of the target audience and multiple advertisers have advised the producer that they cannot receive ICI on their cable service.”

Videotron countered that it has received no requests from analog clients to get access to ICI, and its contractual obligations prevent it from removing other channels from analog.

In the end, the CRTC sided with Videotron, judging that its interpretation of the commission’s intention to encourage the phasing-out of analog cable is correct. It also cited the lack of opposition from people unconnected to ICI, as well as the substantial assistance the station is receiving from Rogers as a result of the sale of CJNT, in its decision.

Videotron has already begun the process of shutting down its analog network. After dismantling the network in Gatineau, it has started in Montreal with the Ahuntsic region.